Would a High Pay Commission answer the right question?

The argument is that high pay should be regulated because excessive pay led to the taking of excessive risks, which in turn led to the financial crisis and the deep recession we are now experiencing.

It does seem that pay rewards that were not linked to long term sustainable profits and that took no account of systemic risk were a factor that helped cause the financial crisis. Simply focusing on high pay itself risks avoiding the main issues however, and unless there are some internationally agreed standards it is difficult to see how rules could be enforced. That is not to say we should avoid talking about bonuses etc, it's just that we need to think more deeply than that.

The banking sector spent years arguing against more regulation and certainly often it seemed against government intervention across the economy. Then came the crisis and banks were queuing up to request or even demand the biggest government bailout in history, on pain of a systemic failure which they could do nothing to prevent on their own. Now, government guarantees are supporting the sector.

Surely this raises questions about the place of banking within our society. It is not separate; it is part of society. Therefore it should be part of a working towards the common good, or at least not working against it.

Unless we rethink how we want banks to operate we risk setting up problems for the future. Government bailouts mean that we have major moral hazard - the government will always come along and get banks out of a mess.

It is actually a pro City argument to suggest we rethink the role banks should play: we need the City to be suited to the challenges of the future, with all the skills it can apply. The government could be more proactive with a clearer sense of what it believes future banking should look like. The taxpayer's holdings in banks could be managed on behalf of the entire UK plc, not just as if the government were another shareholder.

We should not be too hard on government however. It has saved the financial system from collapse in this country: if it had failed we would be in a depression, not a recession, and our financial sector would probably have imploded.

When we think about high pay, this is the context in which we need to think. Really the link to the financial crisis is pay not linked to sustainable profits and manageable risk, however high it is. High pay in itself is another issue, whatever we may think about it.

And we must consider how the politics of this look too, for Labour. I think supporters of a High Pay Commission need to explain a bit better why this is not the politics of envy.

I assume this commission would of course also regulate the pay of top footballers and pop stars.